Comparison of Cloud-Based and On-Premise POS Systems

What is the difference between cloud-based and on-premise POS systems? Beyond the mode of deployment, among the starkest factors include pricing, service delivery, accessibility and ability to scale fast. All these will impact on your POS capability. There are pros and cons on both sides, and this guide will help you understand better which one is a better fit to your operation:

1. Advantages of on-premise POS software
2. Disadvantages of on-premise POS software
3. Examples of on-premise POS software
4. Advantages of cloud-based POS software
5. Disadvantages of cloud-based POS software
6. Examples of cloud-based POS software
7. Comparison in pricing
8. Is a hybrid model better?

You are a business owner looking for a point-of-sale system to automate your sales processes. But then you found out that there exist two types of these solutions–on-premise and cloud-based. So which one would you choose? Although such platforms may share common features regardless of the way they are deployed, there remain certain considerations to be made and product knowledge to be gleaned when choosing one. Aside from this, purchasing such systems involve substantial investment which can impact a business’ finances in the long run, hence the need for a comparison of cloud-based and on-premise POS systems.

As could be expected such tools have grown in popularity among retail establishments, food services and other businesses over the years. In fact, the global market for POS software is forecast to grow at a CAGR of 7.79% by 2021. The increased use of POS accessories for use in data collection is seen to drive this growth. The expansion of the market will also be fueled by changes in the retail industry such as the upstick in the number outlets specifically in developing countries. Meanwhile, mobile POS systems will continue to be the dominant POS tool in the restaurant industry. The increase in the use of mobile technology and the declining prices of mobile devices are seen to drive the development. However, the market for traditional POS systems is also expected to expand during the period.

Differences Between On-Premise and
Cloud-Based POS Systems

There are many reasons why knowing the difference between traditional and cloud-based POS software providers are of critical importance prior to purchasing services of one. To do this, we must first familiarize ourselves with the two systems. This comparison of cloud-based and on-premise POS systems is meant to walk you through the unique aspects and the benefits that these tools offer. On-premise POS systems or the traditional ones, operate within an internal network and use local servers in storing information. They work a lot like the programs that you use on your personal computer, which save data on your local drive. Such tools are purchased up front with data accessible only from the local server or with the use of an alternate web app.

Cloud-based POS software, on the other hand, are the latest thing to hit the POS market. These tools leverage cloud technology to provide users with the ability to access the platform whenever and wherever there is an Internet connection. Cloud-deployed systems have gained quite a following especially among small businesses owing to their flexible pricing and the many functionalities that they offer. They work well with most POS hardware such as cash registers and printers. Aside from this, the level of comfort and benefits that these products offer are unparalleled as they support most mobile devices.

Advantages of On-Premise POS Software

On-premise POS systems have distinct advantages over their cloud-based counterparts, which make them ideal for use by large companies and restaurants.

1. Extensive display setup. When you buy a traditional POS, it’s like purchasing furniture. They are quite bulky but these systems and their 15-inch touch screens have been providing users with easy-to-use and stable touchscreen capabilities. They are highly-recommended for use by restaurants, coffee shops and fast food restaurants.
2. Diverse Functionalities. These legacy systems are not going away anytime soon. They continue to offer businesses other distinct benefits that include inventory management, accounting and data storage and security, a top concern among businesses today. Cloud-based POS systems were created to replace these platforms but in many cases, they end up augmenting these solutions.

Disadvantages of On-Premise POS Systems

1. No Mobile Optimization. If there is one drawback in the use of traditional POS systems, it is in the area of mobility. Platforms that do not possess remote login functionality require users to be present at the terminal to be able to transact.
2. Expensive Implementation. Costs associated with implementing traditional POS systems are quite high, considering that additional hardware are required. This is the reason why such platforms are not recommended for small businesses whose budgets may not be able to meet such systems’ prices.

Examples of On-Premise POS Software

1. NCR CounterPoint

NCR CounterPoint is an on-premise POS platform that boasts robust features designed to cater to retailers. Using the software, businesses can make maximum utilization of their selling processes. An integrated marketing system allows for the creation of marketing campaigns using client information as basis. The system also doubles as an inventory management tool, allowing users to manage multiple store locations simultaneously. POS terminals can be customized using NCR CounterPoint to support both manual and touchscreen entry.

Intersystem messaging and employee tracking functionalities facilitate communication of a seller’s entire retail operation. In addition, daily sales can be monitored and daily reports can be automatically generated with readings of drawer amounts instantly available for viewing.

2. POSExpress

On-premise POS platform POSExpress is designed to cater to retailers and restaurants. It is made up of a number of modules such as the POSExpress QSR for retailers and the POSExpress Retail module for use by restaurants. Other modules include those for use in customer management, accounting, inventory and accounting. The system supports machines running on Windows and can also be deployed as a client server software. It is targeted at medium-size businesses but can also benefit small businesses that are in the process of growing.
With the platform, users can effectively manage all aspects of POS operations, which include special orders, returns and credit card processing. Its built-in CRM is capable of building a client database, tracking purchase history and email marketing.

3. AmberPOS

Designed for SMBs that engage in retail, AmberPOS is a complete point-of-sale system that sports functionalities like CRM and inventory management. Its CRM enables users to track customer profiles and is capable of purchase trends analysis. The app can likewise analyze and make sense of retailers’ daily sales figures and is a vendor management system that can facilitate retailer-supplier communication. An optional add-on that comes in the form of an e-Commerce module allows for the integration of the system with popular shopping carts.
The platform supports all machines running on Windows7, 8 and Windows Server 2008/2013. Users get to enjoy 24/7 customer support and training for using the app.

Advantages of Cloud-Based POS Systems

As could be expected, cloud-deployed POS software have much to offer compared to legacy systems. These myriad of benefits are brought about by the use of cloud technology and ground-breaking tools that accompany such platforms. Here are some of them:

1. Accuracy. For small businesses, problems associated with sales and inventory tracking have long plagued their operations. Precious time is often lost in identifying errors, adversely affecting sales and the prospect of growth. As cloud systems eliminate the need for manual entry, the chances of such mistakes occurring are minimized. This increases the prospect of increasing sales and effecting business growth.
2. Remote Access. Perhaps the greatest benefit of cloud-based POS software is its ability to allow users to access them from remote locations. This way, relevant users do not have to be in the store to know everything that’s happening on the ground. They can accomplish these even when they are away, resolving the problem of declining sales in the absence of supervision. Cloud-based systems provide users with updates and takes on tasks that users usually perform inside the establishment.
3. Subcription-Based Pricing. Cloud-deployed POS solutions can be purchased on a subscription basis, with vendors charging sellers little or no upfront fees at all. This is why they are ideal for small businesses as initial investment is kept to a minimum. The monthly fees that come with these tools are inclusive of data backup and system upgrades. However, prospective software buyers should be wary that subscription pricing does not fit all businesses. For some, it may prove just as pricey as on-premise software when used long-term. You should do the math before committing to any service.
4. Highly-Scalable. Subscribing to a POS system on a monthly basis makes it easy for users to increase or reduce the number of devices that they are using. This is especially applicable to sellers who get to have holiday business. Aside from this, scaling does not require additional hardware, resulting in additional savings.
5. Data Security. As these systems are cloud-based, data security poses no problem to users. All transaction information are automatically backed up, ensuring that they are safe even in the event of a system crash or device loss.
6. Promotions/Sales Management. Promotions have long been a staple for managers when it comes to customer attraction and retention. Managers often have a hard time monitoring short-term promotions’ terms, specifications and duration, which could result in sales and customer loss. Cloud-based POS software enable businesses to monitor both promotions and sales easily, giving businesses an idea as to which promotions work. Checkout lines that drag on can cause customer loss among small businesses. These platforms speed up the process, providing cashiers with product information instantly, allowing them to better serve clients. Users no longer have to manually enter product descriptions, ridding customers of the need to wait in long queues.
7. Business Insights. Apart from their ability to instantly scan items, cloud-deployed POS software provide users with the capability to track and record transactions, with purchase histories, both online and personal available for viewing anytime, anywhere. This provides businesses with the necessary information for growth and increased profits. Highly-sellable products/services can also be determined. They also also help businesses in coming up with target marketing campaigns using customer purchase habits, demographics and other variables as basis.
8. All-In-One Solution. Most cloud-based POS systems are now accompanied by a variety of tools that can greatly benefit businesses. This often results in cost savings for users as they no longer need to purchase new business and marketing software, which are notoriously expensive. A single system, if chosen properly, will suffice, saving users precious time as opposed to shopping around for single platforms.
9. Inventory Management. Inventory management is a key feature of cloud-based POS solutions. This capability benefits enterprises that sell both in physical stores and online as consistency in product inventory is indispensable for these sellers. Using cloud-based POS systems, businesses can not only track but sort their inventories as needed, be it by item description, product type or any other category. Product information can also be tracked, significantly improving customer services.

Disadvantages of Cloud-based POS Software

Despite their numerous benefits cloud-based POS solutions are not without flaws. They also have shortcomings that users must contend with. These include:

1. Internet-Dependent Tool. Cloud-based POS systems require constant Internet connection and stable ones at that. Users run the risk of service disruptions with unstable connections. Many businesses take the precaution of using two networks, with one serving as an alternative in the event the other one suffers downtime. This way, the possibility of losing sales from system downtime is avoided.
2. Non-Customizable Solution. POS software that are deployed via cloud do not make room for customization. This inadequacy poses no problem for SMBs, who lack time and budget for such upgrades. However, larger organizations may prefer to retain their brand by customizing their system.
3. Limited Customer Support. Despite the presence of online support, cloud-based POS often do not require tailored support as they are usually intuitive and easy to use. For larger retailers, traditional systems may be recommended as support for these platforms can be tailored to suit their needs.

Examples of Cloud-Based POS Software

1. Toast POS

Toast is a cloud-based restaurant management software serving US-based businesses. Known for provides users with both business control and visibility, its notable features include reporting, CRM, online ordering, credit card processing and labor and inventory management. Users are bound to make savings from using the solution as it effectively eliminates the need for costly hardware associated with traditional POS. Integration with popular third-party applications is possible thanks to the APIs that come with the system. The vendor offers a great free demo plan if you want to try its features first. You can easily sign up for a Toast free trial here.

Toast POS’ restaurant management functionalities include time-specific menu pricing, menu customization and menu set up. It has a restaurant ordering feature that can split both menu items and bills among clients and generates automatic notifications when an order is ready. With the product, users can take orders on the fly, making for faster restaurant service. Payments are likewise made simple with the app’s ‘pay at the table’ feature, which allows for receipt printing and emailing and server tipping straight from tablet computers.

2. Square

Square is a popular POS software that enables users to accept payments using any device running on Android or iOS, on the counter or from anywhere. It has a free solution and a magstripe reader, which can process debit and credit card payments. The platform is also able to track real time sales and inventory and manage individual items. To top all of these functionalities off, Square is available absolutely for free. You can easily sign up for a Square here.

As the solution is cloud-based paperless transactions are promoted, with digital receipts, inventory management and general sales reports automatically stored by the system. Its analytics and intelligent reports provide businesses with visibility across their operations, allowing them to make sound decisions. This flexible tool is able to cater to businesses of any type and size, providing them with automatic updates that bring new features to this already robust system.

3. TouchBistro

A popular iPad POS solution, TouchBistro is designed to provide the needs of restaurants, be they quick- or full-service establishments. Using the platform, restaurants can boost sales, make smarter business decisions and improve their service. It has capabilities that include floor plans and tables management, staff scheduling, inventory, and tableside orders management.

As the software is cloud-deployed, users can access all its features anytime, anywhere, including its reporting and analytics functionalities.
TouchBistro is also quite inexpensive and has established itself as an intuitive platform. Its features are specifically designed for food service, which is further complemented by its advanced management features, making it the ideal system for any restaurant. You can try its feature at no cost when you sign up for a TouchBistro free trial here.

4. StoreZigo

StoreZigo is a feature-complete billing solution designed to handle your entire store operations, from creating bills and awarding discounts to scanning barcodes and tracking expenses. The software can handle both offline and online transactions, allowing you to stay vigilant at all times on your remaining stocks and when you should replenish them.

With StoreZigo, you don’t have to start your workflows from scratch. The platform is quite flexible as it allows you to adapt the system to suit your workflows and processes. Additionally, it has CRM capabilities for tapping existing and potential clients, eCommerce website for selling of products online, and detailed reporting functionalities for actionable insights to drive business success, among others.

Comparison of Pricing between On-Premise and Cloud POS

POS Software entail significant investment for businesses. The two deployment types have different pricing schemes that may suit retailers depending on their needs.

On-Premise POS Software

These type of POS solutions may be recommended for larger businesses who have better cash flows than small enterprises as they do not come cheap. They could cost users anywhere from $3,000 to $50,000 annually, apart from the cost of additional software licenses. Businesses are also required to pay yearly maintenance fees in addition to hardware and IT expenses.

Cloud-Based POS Software

Most of these platforms are sold on a subscription basis, costing businesses a mere $5 to $10/room. Vendors also charge a one-time setup and training fee for around $500. No additional hardware are required to set up these systems and software upgrades come for free. Although monthly costs do mount in the long-term, these tools are considered much more economical and therefore, suited to small to medium-size businesses.

The Hybrid POS Software

As the popularity of cloud-based POS solutions increased, so did the need to rid the technology of its primary flaw–its constant need for Internet connectivity. It is for this reason that hybrid POS systems came into existence. Designed for small businesses such as restaurants, this new breed of POS platforms make use of local servers such as those of on-premise systems. This assures users of a stable application that does not require an Internet connection to properly function.

Hybrids while enjoying the stability of legacy platforms, provide users with cloud-based reporting capabilities. A very useful feature for business owners who need to constantly monitor what’s happening on the ground. Such systems have all the functionality of cloud-based tools that can be accessed anywhere at any given time.

Basically, the benefits of Hybrid POS systems are anchored on the fact that they reap the benefits of both on-premise and cloud-based applications. Hybrid systems are marketed pretty much the way cloud-based POS software are priced. They are way cheaper than legacy systems, making them ideal for small to medium-size businesses. The solution has all the features of cloud-based POS, without its weaknesses. And since Internet connectivity is no longer an issue, it is as stable as any other traditional system in the market.

Examples of Hybrid POS Software

1. eZee BurrP!

A restaurant management platform that can be considered as a hybrid, eZee BurrP! is designed to help businesses boost their franchise and chain management processes. The platform is made up of a POS, a feedback system and a digital menu, making it highly ideal for restaurants with multiple locations. Connected franchises and locations are controlled by a head office module, which also manages restaurants’ rates and menus. The app can control stock and inventory to some degree, minimizing wastage while offering inventory level tracking. This results in decreased discrepancies in stocks and improved efficiency. eZee BurrP! has mobile applications that support both iOS and Android devices, allowing users to manage their operations anytime, anywhere.

2. AccuPOS

Powerful POS platform AccuPOS offers robust reporting capabilities as it is compatible with many accounting software, which include Sage and QuickBooks. It has a vast array of features, including CRM, employee time/attendance recording and customer loyalty program creation. Users can make inventory adjustments, access online reports, issue gift cards and add customer comments and notes. Despite all these functionalities, AccuPOS’s primary purpose is to streamline restaurant processes. It has apps that support devices running on Android so that users can access the platform even on the go. This mobile optimization allows users to quickly and remotely enter food orders and process cards anywhere on the restaurant’s premises. The app can both speed up and make tableside service more accurate while providing users with mobile credit card processing capabilities.

3. Upserve Breadcrumb POS

An inexpensive POS software known for its ease-of-use, Breadcrumb POS is designed for use by clubs, bars and restaurants. It has a wide range of features that allow for table management, specialty ordering and customer management. It is highly-customizable, enabling users to tailor the platform, to their liking. Using Breadcrumb POS, orders can be taken and directly delivered to the table. It likewise lets customers pay using digital checks while collecting payment. Its interface is laden with features, allowing users to search menu items, alter menus and enable automated countdowns. Custom menus can also be created to suit customers needs. Loss of Internet connection is no problem as the product can be operated offline and can still process payments. Aside from these, users can also access restaurant data at any given place in time as the tool supports iPhone devices.

Bottom Line

In this comparison of cloud-based and on-premise POS systems, we have learned so far that both deployment methods have their own strengths and weaknesses. On-premise POS solutions maybe too costly for some businesses, but for large companies, they provide a stable platform where transactions can be performed hassle-free. Cloud-based solutions, on the other hand, offer numerous features at a far lower cost to users. However, they can be impeded by the fact their operation depends largely on Internet connectivity.

We have also learned that hybrid versions of these systems are now available. Innovative solutions that combines all the benefits of the two preceding platforms while possessing none of their weaknesses. However, the choice is still yours to make. There are tons more of such tools out there such as those contained in this top 20 POS software guide. Choose the product that best suits your needs without breaking the bank and you’ll reap all the benefits that it has to offer.